Numeracy, Financial Literacy and Participation in Asset Markets
40 Pages Posted: 8 Feb 2011 Last revised: 24 Apr 2011
Date Written: April 22, 2011
We measure levels of numeracy and financial literacy in the Swedish population and link these to participation in two key asset markets: stocks and housing. Many adults have low levels of both numeracy and financial literacy, with large differences between demographic groups. Numeracy is positively correlated with participation in both markets, also when controlling for other individual characteristics, whereas financial literacy is correlated with stock ownership but not with homeownership. Our results corroborate the view that non-participation is a common response to deficiencies in numeracy and financial literacy, and also point to important differences between the stock and housing markets.
Keywords: Numeracy, financial literacy, household finance, market participation
JEL Classification: A2, D14, I22
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